Interest Prohibition

[porus]

.. I am not an economist but know enough to know interest is not the cause of poverty..

It would be more accurate to say that interest alone is not the cause of poverty. However, it is major contributor to it. I will continue my discussion with Fatwa Banker in order to try to demonstrate just that.

And fr die hard Abdes can you stop using public services, hospitals, send money as wajebaat and najwas in forex as this are all rated and tainted through interest

I agree that condemning interest and then to continue using world currencies is hypocritical. Unfortunately, short of creating an interest-free currency, there is currently no alternative.

[porus]

You are splitting hairs now, the Congress is part of the US Government.

Congress is but Federal Reserve is not.

Again, this is not how the system works. Government does not borrow money from the Federal Reserve at 10%, it is simply factually incorrect. Government issues debt in the form of securities that you and I can purchase. The Federal Reserve will also buy or sell this Government debt to control liquidity and interest rates in either direction. By the way, US Treasury is separate from the Federal Reserve. You will not get an argument from me in favour of the National Debt, I believe in a smaller government and balanced budgets, but we digress.

Government does not issue debt. It incurs it. I thought I made this clear. If the Govenment decides it needs extra money, it will sell securities to FedRes. FedRes then prints the money to put it into the circulation. FedRes will earn interest on the securities which it now holds. This additional money has not been printed. Interest will never be repaid in full. However substantial portion of the growth in wealth will be used by the Government to service the debt so incurred.
I mentioned Treasurydirect as a source of economic data only. US treasury is part of Government. FedRes is not.

Again, that makes no business sense whatsoever for me to comment unless you can elaborate further as to the point you are trying to make. Of course A will keep his money in the bank drawing a 7% yield if his business will produce less than 7% and so will B in the same scenario!

Think outside the box. What if Banks were not paying interest, then there will be no incentive to put the money with them.

porus wrote: Why does not the Government create money itself so that people are not burdened by interest debt? "

This would devalue the currency to the point of it being worthless as legal tender, not to mention hyper inflation. You will indeed need your spare tire to buy rice then !

Is that a dogma or do you have evidence for this assertion?

A just enabled C to buy a car, which he could not otherwise purchase. This is turn created a sale for the car company added to their profit, created value for its shareholders, and increased their ability to create jobs. Your point is ?

He could have done that even if he did not have to pay interest.

porus wrote: "Why would they [poor countries] need loan in the first place?"

You tell me...no one is forcing them to. My guess is because they are poor !

No. It is because the poor countries are either sitting on valuable resources or their land has some other strategic value to the rich countries. The rich bring them into financial system and impose loans on the poor.

[Fatwa Banker]

Congress is but Federal Reserve is not.

Yet its Chairman is appointed by the President, confirmed by the Senate, which also provides judicial oversight and governs its role with legislation. Like I said, you are splitting hairs.

Government does not issue debt. It incurs it. I thought I made this clear.

Issuing debt is a financial term referring to the process by which money is borrowed (debt versus equity transactions). Look it up

If the Govenment decides it needs extra money, it will sell securities to FedRes. FedRes then prints the money to put it into the circulation. FedRes will earn interest on the securities which it now holds. This additional money has not been printed. Interest will never be repaid in full. However substantial portion of the growth in wealth will be used by the Government to service the debt so incurred.

This is what I said in my earlier post " Government issues debt in the form of securities that you and I can purchase. The Federal Reserve will also buy or sell this Government debt to control liquidity and interest rates in either direction." You started this dicussion by saying that the Government borrows money from the Fed at 10% interest. Your position has evolved during the course of this discussion (which is a good thing).

Think outside the box. What if Banks were not paying interest, then there will be no incentive to put the money with them.

Correct, and B will no longer have access to A's money to start a business or buy a car (unless A happens to be his Brother-in-Law).

This would devalue the currency to the point of it being worthless as legal tender, not to mention hyper inflation. You will indeed need your spare tire to buy rice then !

Is that a dogma or do you have evidence for this assertion?

Actually common sense; free is worth less than not free. Using your previous example, if your house costs 40,000 spare tires which used to cost $100 each but now they are free, seller will no longer accept your tires for a house payment or require exponentially more tires for the same house.

A just enabled C to buy a car, which he could not otherwise purchase. This is turn created a sale for the car company added to their profit, created value for its shareholders, and increased their ability to create jobs. Your point is ?

He could have done that even if he did not have to pay interest.

You mean he had access to money with no interest and he still went to the bank ? Dumb move....

No. It is because the poor countries are either sitting on valuable resources or their land has some other strategic value to the rich countries. The rich bring them into financial system and impose loans on the poor.

Is that a dogma or do you have evidence for this assertion?

[porus]

FB,

These to and fro rejoinders are not advancing us much further. I will suspend this discussion until I can find a better way of discussing the issues on this board.

In the meanwhile, I would recommend a book, 'Web of Debt' , by Ellen Brown. Here is a quote from Foreword:

The process by which money comes into existence is thoroughly misunderstood, and for good reason: it has been the focus of a highly sophisticated and long-term disinformation campaign that permeates academia, media, and publishing. The complexity of the subject has been intentionally exploited to keep its mysteries hidden. Henry Ford said it best: “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Ellen Brown’s book focuses on a more fundamental fraud in the banking system – the creation and control of money itself by private bankers, in a debt-money system that returns a steady profit in the form of interest to the debt-money producers, saddling the nation with a growing mountain of unnecessary and impossible-to-repay debt. The fact that money creation is nearly everywhere a private affair is largely unknown today, but the issue is not new. The control of the money system by private interests was known to many of our earlier leaders, as shown in a number of quotes reprinted in this book, including these:

The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the Government ever since the days of Andrew Jackson.
-- President Franklin Delano Roosevelt, November 23, 1933, in a letter to Colonel Edward Mandell House.

Some people think the Federal Reserve Banks are U.S. government institutions. They are not . . . they are private credit monopolies which prey upon the people of the U.S. for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will.
-- Congressman Charles McFadden, Chairman, House
Banking and Currency Committee, June 10, 1932

[Fatwa Banker]

Too bad, I was beginning to enjoy the discussion based on your knowledge of the subject matter, not someone else's.

[TBG]

Bro FB and Porus,

I have thoroughly enjoyed the discussion at hand and learned a fair bit about the current system in place. There is a fair bit that i also could not understand and hoping to work more on it to comprehend.

Based on whats written by Elleb Brown, the question i have is if these feds control everything then why is the goverment not doing anything about it. I assume that the govt knows its power and what it is capable of doing. I fail to understand knowing this the govt does not take any action against them or curb its powers.

[ozmujaheed]

The world in 2010 is different from 1932 or 800AD. Be cautious in trying to apply or reasoning. History should be referenced but not copied.

[ghulam muhammed]

America’s Ten Most Corrupt Capitalists

The financial crisis has unveiled a new set of public villains—corrupt corporate capitalists who leveraged their connections in government for their own personal profit. During the Clinton and Bush administrations, many of these schemers were worshiped as geniuses, heroes or icons of American progress. But today we know these opportunists for what they are: Deregulatory hacks hellbent on making a profit at any cost. Without further ado, here are the 10 most corrupt capitalists in the U.S. economy.

1. Robert Rubin

Where to start with a man like Robert Rubin? A Goldman Sachs chairman who wormed his way into the Treasury Secretary post under President Bill Clinton, Rubin presided over one of the most radical deregulatory eras in the history of finance.

Rubin’s most stunning deregulatory accomplishment in office was also his greatest act of corruption. Rubin helped repeal Glass-Steagall, the Depression-era law that banned economically essential banks from gambling with taxpayer money in the securities markets.Rubin is now attempting to rebuild his disgraced public image by warning about the dangers of government spending and Social Security. Bob, if you’re worried about the deficit, the problem isn’t old people trying to get by, it’s corrupt bankers running amok.

2. Alan Greenspan

The officially apolitical, independent Federal Reserve chairman backed all of Rubin’s favorite deregulatory plans, and helped crush an effort by Brooksley Born to regulate derivatives in 1998, after the hedge fund Long-Term Capital Management went bust. By the time Greenspan left office in 2006, the derivatives market had ballooned into a multi-trillion dollar casino, and Greenspan wanted his cut. He took a job with bond kings PIMCO and then with the hedge fund Paulson & Co.—yeah, that Paulson and Co., the one that colluded with Goldman Sachs to sabotage the company’s own clients with unregulated derivatives.

3. Larry Summers

During the 1990s, Larry Summers was a top Treasury official tasked with overseeing the economic rehabilitation of Russia after the fall of the Soviet Union. This project, was, of course, a complete disaster that resulted in decades of horrific poverty. But that didn’t stop top advisers to the program, notably Harvard economist Andrei Shleifer, from getting massively rich by investing his own money in Russian projects while advising both the Treasury and the Russian government.

This is called “fraud,” and a federal judge slapped both Shleifer and Harvard itself with hefty fines for their looting of the Russian economy.

4. Phil and Wendy Gramm

Summers, Rubin and Greenspan weren’t the only people who thought it was a good idea to let banks gamble in the derivatives casinos. In 2000, Republican Senator from Texas Phil Gramm pushed through the Commodity Futures Modernization Act, which not only banned federal regulation of these toxic poker chips, it also banned states from enforcing anti-gambling laws against derivatives trading. In 2000, when Phil Gramm pushed the bill through, his wife Wendy Gramm was serving on Enron’s board of directors, where she made millions before the company went belly-up.

5. Jamie Dimon

J.P. Morgan Chase CEO Jamie Dimon has done a lot of scummy things as head of one of the world’s most powerful banks, but his most grotesque act of corruption actually took place at the Federal Reserve.

But it is quite uncommon for a banker to be negotiating a bailout package for his bank with the New York Fed, while simultaneously serving on the New York Fed board. That’s what happened in March 2008, when J.P. Morgan agreed to buy up Bear Stearns, on the condition that the Fed kick in $29 billion to cushion the company from any losses.

6. Stephen Friedman

The New York Fed is just full of corruption. Consider the case of Stephen Friedman (expertly presented by Greg Kaufmann for the Nation). As the financial crisis exploded in the fall of 2008, Friedman was serving both as chairman of the New York Fed and on the board of directors at Goldman Sachs.

As it turns out, Goldman was the top beneficiary of the AIG bailout, to the tune of $12.9 billion. Friedman made millions on the Goldman stock purchase, and is yet to disclose what he knew about where the AIG money was going, or when he knew it.

7. Robert Steel

Like better-known corruptocrats Robert Rubin and Henry Paulson, Steel joined the Treasury after spending several years as a top executive with Goldman Sachs. Steel joined the Treasury in 2006 as Under Secretary for Domestic Finance, and proceeded to do, well, nothing much until financial markets went into free-fall in 2008.

8. Henry Paulson

His time at Goldman Sachs made Henry Paulson one of the richest men in the world. Under Paulson’s leadership, Goldman transformed from a private company ruled by client relationships into a public company operating as a giant global casino. As Treasury Secretary during the height of the financial crisis, Paulson personally approved a direct $10 billion capital injection into his former firm.

9. Warren Buffett

Warren Buffett used to be a reasonable guy, blasting the rich for waging “class warfare” against the rest of us and deriding derivatives as “financial weapons of mass destruction.” These days, he’s just another financier crony, lobbying Congress against Wall Street reform, and demanding a light touch on—get this—derivatives!

Buffett has also been an outspoken defender of Goldman Sachs against the recent SEC fraud allegations, allegations that stem from fancy products called “synthetic collateralized debt obligations”—the financial weapons of mass destruction Buffett once criticized.

See, it just so happens that both Buffet’s reputation and his bottom line are tied to an investment he made in Goldman Sachs in 2008, when he put $10 billion of his money into the bank. Buffett has acknowledged that he only made the deal because he believed Goldman would be bailed out by the U.S. government. Which, in fact, turned out to be the case, multiple times.

Buffett was right about derivatives—they are WMD so far as the real economy is concerned. But they’ve enabled Warren Buffett to get even richer with taxpayer help, and now he’s fighting to make sure we don’t shut down his own casino.

10. Goldman Sachs

No company exemplifies the revolving door between Wall Street and Washington more than Goldman Sachs. The four people on this list are some of the worst offenders, but Goldman’s D.C. army has includes many other top officials in this administration and the last.

White House:

Joshua Bolton, chief of staff for George W. Bush, was a Goldman man

Regulators:

Current New York Fed President William Dudley is a Goldman man

Current Commodity Futures Trading Commission Chairman Gary Gensler has been a responsible regulator under Obama, but he was a deregulatory hawk during the Clinton years, and worked at Goldman for nearly two decades before that.

A top aide to Timothy Geithner, Gene Sperling, is a Goldman man

Current Treasury Undersecretary Robert Hormats is a Goldman man

Current Treasury Chief of Staff Mark Patterson is a former Goldman lobbyist

Former SEC Chairman Arthur Levitt is now a Goldman adviser

Neel Kashkari, Henry Paulson’s deputy on TARP, was a Goldman man

COO of the SEC Enforcement Division Adam Storch is a Goldman man

Congress:

Former Sen. John Corzine, D-N.J., was Goldman’s CEO before Henry Paulson

Rep. Jim Himes, D-Conn., was a Goldman Vice President before he ran for Congress

Former House Minority Leader Dick Gephardt, D-Mo., now lobbies for Goldman

And the list goes on.


http://bearmarketnews.wordpress.com/201 ... pitalists/

[ghulam muhammed]

31 Questions and Answers about the Internal Revenue Service (I.R.S.).


1) Is the Internal Revenue Service (“IRS”) an organization within the U.S. Department of the Treasury?

Answer: No. The IRS is not an organization within the United States Department of the Treasury. The U.S. Department of the Treasury was organized by statutes now codified in Title 31 of the United States Code, abbreviated “31 U.S.C.” The only mention of the IRS anywhere in 31 U.S.C. §§ 301‑310 is an authorization for the President to appoint an Assistant General Counsel in the U.S. Department of the Treasury to be the Chief Counsel for the IRS. See 31 U.S.C. 301(f)(2).

2) If not an organization within the U.S. Department of the Treasury, then what exactly is the IRS?

Answer: The IRS appears to be a collection agency working for foreign banks and operating out of Puerto Rico under color of the Federal Alcohol Administration (“FAA”). But the FAA was promptly declared unconstitutional inside the 50 States by the U.S. Supreme Court in the case of U.S. v. Constantine, 296 U.S. 287 (1935), because Prohibition had already been repealed.

3) By what legal authority, if any, has the IRS established offices inside the 50 States of the Union?

Answer: After much diligent research, several investigators have concluded that there is no known Act of Congress, nor any Executive Order, giving IRS lawful jurisdiction to operate within any of the 50 States of the Union.

4) Can IRS legally show “Department of the Treasury” on their outgoing mail?

Answer: No. It is obvious that such deceptive nomenclature is intended to convey the false impression that IRS is a lawful bureau or department within the U.S. Department of the Treasury. Federal laws prohibit the use of United States Mail for fraudulent purposes. Every piece of U.S. Mail sent from IRS with “Department of the Treasury” in the return address, is one count of mail fraud. See also 31 U.S.C. 333.

http://www.supremelaw.org/sls/31answers.htm

[porus]

GM,

Thanks for the excellent snapshot of corruption within the DC establishment. I guess Fatwa Banker will simply reject is as Conspiracy Theorists wanting to bait Capitalists. If you offer him evidence in the orm of books, he will simply ridicule the idea of reading them and reject it. In this he is very much like aqs. When aqs is confronted with Quran or Da'imul Islam, he will first deny it, When pressed, he will say the Dai, the putative 'Haq na Saheb', has 700 interpretations of Quran and ours, which agrees with that of thousands of Ulemas, cannot be one of them.

Along with Federal Reserve, IRS is also unconstitutional. This is a complex subject and we do not have participants to really fire up the debate on this forum. But the debate is alive. It is there all over the Youtube and academia.

... the question i have is if these feds control everything then why is the government not doing anything about it. I assume that the govt knows its power and what it is capable of doing. I fail to understand knowing this the govt does not take any action against them or curb its powers.

Government will not act against the Federal Reserve because it, the Government, itself is controlled by Federal Reserve. GM has presented the evidence here.

Why is a people's Government not creating its own money so it does not have to be burdened by interest payments to International Bankers? This is the question that has been posed by many. The latest was during the 2008 Presidential Campaign when candidate Ron Paul brought out a book called 'End the Fed'.

Here is a question. During the American Civil War, Abraham Lincoln issued Government currency and forbade the use of dollar backed by Central Bankers, He was promptly assassinated. Material for a conspiracy theory?

[Fatwa Banker]

Porus,

What was evident in my dicussion with you is your limited knoweldge of the subject we were dicussing. You promptly backed out of the point by point dicussion with me and resorted to your comfort zone, which is links to opinions of others. We can exchange book ideas till the cows come home, but that is not a discussion. You failed to backup your idea of free money and its realistic implementation. I will be glad to continue our discussion, just spare me the YouTube links.

[porus]

FB,

OK, I will continue along the lines we were pursuing. But I must warn you that I will be relying on opinions of others who have convinced me of their views. Since I have adopted their views and will be using my own words, you can assume they are my views too.

I agree my knowledge in this area is not as wide as I would like, but I hope that I will learn from you as much as from others.

Please bear with me. I may not be able to respond at least until to-morrow.

[Al Zulfiqar]

bro. gm,

you have been posting some very good articles of late. thanks.

if you have noticed, as i am sure many others have, from your list of the ten top corrupt capitalists, the majority are all jews. now thats not to suggest any conspiracy theories, but imagine, if instead they were all naturalised american muslims. there would be utter panic and i'm sure an apocalyptic reaction against the entire muslim world...!!!!

for all the talk of journalistic excellence and fair-handed unbiased reporting of the west, why doesnt the national media in the US keep repeating that the bl***y jews have brought financial destruction upon america, when it is their wont to describe any other minority with a label attached???

[Fatwa Banker]

Porus, please take your time as I am preparing to go vacation so I won't be on this board for a while.

[ghulam muhammed]

Bro Porus and Bro AZ,

Thanks a lot for appreciating my posts. I can produce volumes of material to expose the corrupt practices prevailent in the US financial markets as this happens to be my subject because I closely monitor stock markets but then that would consume a lot of space here. Bro AZ, the root cause of all major problems accross the globe are some very powerful jews and it is they who actually call the shots in the USA. They control almost 96% of the world media which I have detailed on another thread. They not only control the media, financial market, arms supply but are even the number one in the pornographic industry which very few are aware off. Well I wouldnt like to go in details on this sensitive industry as this is not the right place to discuss that subject. I also wouldnt want to blame the entire jewish community for the misdeeds of a few in the same manner as I wouldnt like anyone tarnishing the image of Islam due to certain acts committed by a few who unfortunately happen to be Muslims. I sympathise with the americans who defend their nation on this forum because the fact is that the US administration is a puppet of some very powerful jews who dictate the policies and sadly the ones who suffer are the american citizens but it is more sad that they dont raise their voice against the evil and instead defend it.

The very famous and highly suspect Freemason society is the brainchild of jews. It would be very interesting to speak about them and the 'new world order' and also the 'eagle', 'pyramid' and the 'one eye' on the US dollar.... hopefully on some other thread.

[ghulam muhammed]

To further elaborate on the subject of 'Actual Money' and its linkage to the Fed Reserve:-

What do your IRS taxes REALLY pay for ? How does it work ?

The Private Scam and How it Works. Why do Americans continue allowing this theft by a private ,secret , diabolical bank like this one?

The greatest scam ever !

Most people have no clue what their taxes get spent on. There are so many twists and turns. It is all just smoke and mirrors and I personally am left thinking the privately ,secretly owned Federal Reserve Bank no longer needs to be in this powerful and illegal position. It is in a place where it can steal our labor and goods at will.

Here is how it works. Congress passes a law, the House appropriates the funds. The Federal Treasury Department prints the notes for the appropriation. Then the Federal Reserve purchases these notes/paper at the cost of printing, about 4 cents note. A $1bill, $100 bill, or $1000 bond, costs the same 4 cents. The Federal Reserve then loans this money back to the Federal Government at interest based on face value. This interest rate may fluctuate. The cash is then distributed to the regional Federal Reserve banks from which the appropriations are disseminated as per the Congressional mandate.

Now, as the interest climbs with each appropriation, this debt requires payment your taxes – and occasionally the taxes must be increased to keep up with the “can never be paid off by design, debt”. The Federal Reserve profits greatly on this value created out of thin air paid by IRS collected taxes, and OUR REAL ASSET collateral on loans that go into foreclosure/confiscation.

Periodically, the Federal Reserve will ask Congress for an increase in money supply. This indirectly taxes folks by pumping cash into the economy which decreases the buying power of the dollar. This makes it seem as though prices have risen – not the case, the money added causes the value of the dollar to drop. This is the inflation tax. A tax that causes big problems for people with savings or on fixed incomes. The frightening thing is, the FED-IRS has NEVER had it’s books opened to Congressional scrutiny.

In this unique Federal Reserve/Federal Government relationship the IRS works as the “Taxing Arm For The FED” – NOT the Federal Government which is prohibited from direct taxing at Article 1 section 9 clause 4 of the Constitution! Now you know.

The above information is downloaded from the net.

[Fatwa Banker]

I have never seen such misinformation and utter nonsense go unchallenged on this board for so long. Perhaps it is because I am not anti-American or a Jew hater, anyone out there that meets those qualifications that also understands financial markets ? I am obviously not getting through.

For the last time THE FED DOES NOT PRINT MONEY TO LOAN IT TO THE GOVERNENT AT INTEREST NOR DOES IT BUY T-BILLS AT THE COST OF PRINTING ! If it did, the money would flow back into the US Treasury at the end of the year because all Net Income of the Fed is transferred to the Treasury. If this were true, the US Government would not have a record deficit instead it would run surpluses since the money it “borrowed” from the Fed which it in turn printed, would flow right back into the Treasury including interest ! Do you even comprehend what I am saying ? You are so blinded by your ideology that you seek out conspiratorial nonsense that supports your theory instead of trying to understand the system. For example, during this love fest with GM’s links, Porus failed to notice that GM’s quote (“downloaded from the net”) contradicted what he(Porus) had to say about printing money to finance the Government , and supported my contention of a devalued currency and inflation which Porus called dogma !

Give me the courtesy of leaving your biases aside just for a moment and review the facts otherwise this is a total waste of time.

I can produce volumes of material to expose the corrupt practices prevailent in the US financial markets as this happens to be my subject because I closely monitor stock markets

GM, If I were you, I would change subjects and hire a stock broker.

[porus]

GM,

I would ask that you provide us with the links to the quotes you are using in your posts.

FB,

I applauded GM's articles before his last input. His example of the printing of bank notes at a fraction of its actual value is not what I had in mind at all. In any case, as you know, the bank notes and coins are not the most significant portion of the money supply. By 'printing money' , I meant creation of fiat money and includes totality of M1, M2 and M3. If you consider fiat money, GM has not contradicted me.

Money is indeed created by fiat by Central Bankers. It is loaned to Government at interest. No money is created to enable this interest to be paid. Hence debt will keep increasing and Government has no ability nor the intention of paying it back. In this system some will lose and their assets will wind up in financiers' pockets.

Inflation is partly the increase in money supply but primarily caused by shortages either by design or by wars and natural calamities. The cause by design can be minimized if the currency was created by Government. In the period of American Civil War, government created greenbacks and there is plenty of evidence that inflation was the result of war itself not because government created money.

After the war, European, mainly British, financiers flooded America with counterfeit greenbacks causing severe inflation and this led to Lincoln's assassination. This is also the opinion of Otto von Bismark, the famous German Statesman of the 19th century.

The American Civil War is a practical demonstration of how Government can create money without burdening itself with debt and contain inflation too.

I believe that in Japan, there are parallel currencies operated by communities in addition to the Central Bank. I have heard that inflation in these currencies is much less than in Japanese currency.

Do you have an example of hyperinflation which is caused by government creating money other than wars and natural calamities? I would ignore irresponsible African Governments, if you can find an example there.

[porus]

For the last time THE FED DOES NOT PRINT MONEY TO LOAN IT TO THE GOVERNENT AT INTEREST NOR DOES IT BUY T-BILLS AT THE COST OF PRINTING ! If it did, the money would flow back into the US Treasury at the end of the year because all Net Income of the Fed is transferred to the Treasury. If this were true, the US Government would not have a record deficit instead it would run surpluses since the money it “borrowed” from the Fed which it in turn printed, would flow right back into the Treasury including interest !

I believe that the Government will benefit exactly as you have stated. It will not be beholden to private Bankers for interest and will not incur any debt. Any surplus can be recycled back to the people of the country.

However, if you believe that FED does not 'print' aka create money by fiat, then why don't you tell us how it is created.

For those who do not know, 'fiat' is a Latin word meaning creation by word. Just like Allah who says "Be" and it exists.

[Fatwa Banker]

Porus,

I said from the onset:

Well of course money is created by fiat

We have come a full circle here and back where we started. To continue I would have to regurgitate what I have already said. I thank you for re-engaging, but I will take a break from this discussion and give anyone interested a chance to lookup how debt is really financed by Government and the affects of printing money to finance debt.

[porus]

.... I will take a break from this discussion and give anyone interested a chance to lookup how debt is really financed by Government and the affects of printing money to finance debt.

Let me summarize my understanding. Government decides it needs money. It issues securities and Fed buys the securities with the money it creates by fiat. This then is the debt incurred by the government on which it will pay interest. I do not understand what you mean by government 'financing debt'. Government incurs debt and that is that.

Government will pay interest on debt so incurred by revenues from taxation. Soon all the tax revenue will not be enough to service the debt to Fed, let alone repaying the the debt principal.

You have said that that is not how money is created. Well then, tell us how.

I will look forward to your reply if you decide to re-engage. Thanks

[ghulam muhammed]

Let me summarize my understanding. Government decides it needs money. It issues securities and Fed buys the securities with the money it creates by fiat. This then is the debt incurred by the government on which it will pay interest. I do not understand what you mean by government 'financing debt'. Government incurs debt and that is that.

FIAT CURRENCY :-

Thomas Jefferson is reputed to have said that, “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

Jefferson did not need a crystal ball to see the rise of The Federal Reserve, a private bank which controls the United States’ Money. Jefferson was well aware of the international banksters even in his time. The inevitability of small groups of elite, well-heeled people to group together and prey on their fellow man is not exactly a new thing either.

Black’s Law Dictionary [Sixth Edition, 1991] defines “fiat” as an “A command or order to act. Arbitrary or authoritative order or decision.” “Fiat money” is likewise defined as, “inconvertible paper money made legal tender by a government decree.” Inconvertible to, for example, gold or silver. Made legal only by government decree. “Colored money”, i.e. money with the “deceptive appearance, assumed exterior, concealing a lack of reality.”

Federal Reserve Notes (FRNs) are colored money. They have no value, except by virtue of a government decree -- a decree arrived at under conditions of duress, and thus in all probability invalid. Just as The Decree of Franklin Roosevelt in recalling gold from the hands of the citizenry was under the direction of the international Banksters, the use of FRN’s is a continuation of this directive. This in turn is linked to the US Bankruptcy, the questionable use of Executive Orders, and what has become to be a Crisis in American Government -- including Social InSecurity and the Infernal Revenue Service.

Consider, for example, the response of The Federal Reserve to questions about the validity of this state of affairs. A little research can be very enlightening.

The following dialogue is reputed to be a conversation with a Mr. Ron Supinski of the Public Information Department of the San Francisco Federal Reserve Bank.

CALLER - Mr. Supinski, does my country own the Federal Reserve System?

MR. SUPINSKI - We are an agency of the government.

CALLER - That’s not my question. Is it owned by my country?

MR. SUPINSKI - It is an agency of the government created by congress.

CALLER - Is the Federal Reserve a Corporation?

MR. SUPINSKI - Yes

CALLER - Does my government own any of the stock in the Federal Reserve?

MR. SUPINSKI - No, it is owned by the member banks.

CALLER - Are the member banks private corporations?

MR. SUPINSKI - Yes

CALLER - Are Federal Reserve Notes backed by anything?

MR. SUPINSKI -Yes, by the assets of the Federal Reserve but, primarily by the power of congress to lay tax on the people.

CALLER - Did you say, the power to collect taxes is what backs Federal Reserve Notes?

MR. SUPINSKI - Yes

CALLER - Where does the Federal Reserve get Federal Reserve Notes from?

MR. SUPINSKI - They are authorized by the Treasury.

CALLER - How much does the Federal Reserve pay for a $10 Federal Reserve Note?

MR. SUPINSKI - Fifty to seventy cents.

CALLER - How much do they pay for a $100.00 Federal Reserve Note?

MR. SUPINSKI - The same fifty to seventy cents.

CALLER - To pay only fifty cents for a $100.00 is a tremendous gain, isn’t it?

MR. SUPINSKI - Yes

CALLER - According to the US Treasury, the Federal Reserve pays $20.60 per 1,000 denomination or a little over two cents for a $100.00 bill, is that correct?

MR. SUPINSKI - That is probably close.

CALLER - Doesn’t the Federal Reserve use the Federal Reserve Notes that cost about two cents each to purchase US Bonds from the government?

MR. SUPINSKI - Yes, but there is more to it than that.

CALLER - Basically, that is what happens?

MR. SUPINSKI - Yes, basically you are correct.

CALLER - How many Federal Reserve Notes are in circulation?

MR. SUPINSKI - $263 billion and we can only account for a small percentage.

CALLER - Where did they go?

MR. SUPINSKI - Peoples’ mattress, buried in their back yards and illegal drug money

CALLER - If the Federal Government would collect every Federal Reserve Note in circulation would it be mathematically possible to pay the $4 trillion national debt?

MR. SUPINSKI - No

CALLER - Why is there a current House Resolution 1486 calling for a complete audit of the Federal Reserve by the GAO and why is the Federal Reserve resisting?

MR. SUPINSKI - I don’t know.

CALLER -Does the Federal Reserve regulate the value of Federal Reserve Notes and interest rates?

MR. SUPINSKI - Yes

CALLER - Would you agree it is our country and it should be our money as provided by our Constitution?

MR. SUPINSKI - I understand what you are saying.

CALLER - Why should we borrow our own money from a private consortium of bankers? Isn’t this why we had a revolution, created a separate sovereign nation and a Bill of Rights?

MR. SUPINSKI - (Declined to answer).

CALLER - Has the Federal Reserve ever been declared constitutional by the Supreme Court?

MR. SUPINSKI - I believe there has been court cases on the matter.

CALLER - Isn’t the current money system a house of cards that must fall because, the debt can mathematically never be paid-off?

MR. SUPINSKI - It appears that way. I can tell you have been looking into this matter and are very knowledgeable. However, we do have a solution.

CALLER - What is the solution?

MR. SUPINSKI - The Debit Card

If the reader has any doubts to the validity of this conversation, call your nearest Federal Reserve Bank, YOU KNOW THE QUESTIONS TO ASK! You won’t find them listed under the Federal Government. They are in the white pages, along with Federal Express, Federal Deposit Insurance Corp. (FDIC), and any other business. Find out for yourself if all this is true. And then, go to your local law library and look up the case of Lewis vs. US, case #80-5905, 9th Circuit, June 24, 1982.

It is evident from the legislative history of the Federal Reserve Act that Congress did not intend to give the federal government direction over the daily operation of the Reserve Banks... The fact that the Federal Reserve Board regulates the Reserve Banks does not make them federal agencies under the Act... Unlike typical federal agencies, each bank is empowered to hire and fire employees at will. Bank employees do not participate in the Civil Service Retirement System. They are covered by worker’s compensation insurance, purchased by the Bank, rather than the Federal Employees Compensation Act. Employees traveling on Bank business are not subject to federal travel regulations and do not receive government employee discounts on lodging and services...

The original Stockholders of the Federal Reserve Banks in 1913 were the Rockefeller’s, JP Morgan, Rothschild’s, Lazard Freres, Schoellkopf, Kuhn-Loeb, Warburgs, Lehman Brothers and Goldman Sachs. The MONEYCHANGERS wanted to be insured they had a monopoly over our money supply, so Congress passed into law Title 12, Section 284 of the United States Code. Section 284 specifically states, “NO STOCK ALLOWED TO THE US.”

Recall the quote from John Mayard Keynes:

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic laws on the side of destruction, and does it in a manner which not one in a million is able to diagnose.”

Keynes seems to be quite accurate in his statement. So far, anyway.

For a full dialogue between the 'caller' and 'fed representative', click below:-

http://www.halexandria.org/dward297.htm

[anajmi]

I am not too knowledgeable in this issue but I have been reading this piece that seems to have been written in the 19th century. Not sure.

http://oll.libertyfund.org/?option=com_ ... &Itemid=27

[Fatwa Banker]

Hello Porus,

Let me summarize my understanding. Government decides it needs money. It issues securities and Fed buys the securities with the money it creates by fiat

This is where your confusion appears to lie. As I have said before, the Fed buys these securities in open market auctions just like you and I. The Government finances debt by selling Treasuries and US Savings Bonds. These are issued by the US Treasury, Bureau of Public Debt to be exact. The T-Bills are sold in an auction at a discount off the par value, there is no interest specified. The auction determines the discount and hence the interest you will receive. For example, if you pay $90 for a $100 T-Bill you make a $10 profit at maturity hence costing the Government $10 in interest. The Fed, depending on its monetary goals at the time, may elect to participate in these auctions as a buyer or seller, or it may elect not to participate at all. It may pay for these securities by further increasing the monetary supply (yes created via fiat) or it may not, again depending on its monetary targets. The increase or contraction of the money supply is a part of the Feds monetary policy and it may or may not coincide with purchase of securities at all. The Government pays off these securities at maturity with tax revenues. If it cannot, it may issue new debt to pay off the old, cut spending, increase taxes or literally print money (yes fiat) to pay off the debt.

Government will pay interest on debt so incurred by revenues from taxation. Soon all the tax revenue will not be enough to service the debt to Fed, let alone repaying the debt principal

It is a possibility, but it has not happened yet because the Government has taxing authority so they will just increase taxes in this scenario (unfortunately!). Remember there is no "debt to Fed" except the amount of Government obligations owned by the Fed (if any) at the time and this gets transferred back to the Treasury anyway. The buyers of these debt include (both foreign and domestic) individuals, corporations, banks, unions, pension accounts, and Governments. Over the last several years China has been among the biggest buyers of US debt.

I do not understand what you mean by government 'financing debt'. Government incurs debt and that is that.

Well of course any debt is incurred first or we would not have been having this discussion. We are talking about how it is monetized. "Financing debt" is simply a financial term meaning how money is borrowed to meet the shortfall / debt.

If you have other specific questions I will do my best to address them.

[anajmi]

I don't understand. If you borrow money to pay debt, aren't you actually creating more debt rather than "financing debt"?

[Fatwa Banker]

Anajmi,

All debt is ultimately financed otherwise you become insolvent, or you won't be allowed to incur that debt in the first place without financing. A mortgage loan is used to finance debt related to the home purchase (aka. home financing), same as a car loan and so forth. No new or additional debt is created beyond the loan amount plus interest (if any). The Government is no different, if it runs a deficit (spends more than it takes in), it must finance that debt otherwise it can't run a deficit. The process I outlined above is how that debt is financed.

[porus]

Anajmi,

All debt is ultimately financed otherwise you become insolvent, or you won't be allowed to incur that debt in the first place without financing. A mortgage loan is used to finance debt related to the home purchase (aka. home financing), same as a car loan and so forth. No new or additional debt is created beyond the loan amount plus interest (if any). The Government is no different, if it runs a deficit (spends more than it takes in), it must finance that debt otherwise it can't run a deficit. The process I outlined above is how that debt is financed.

I just do not understand.

I ask a bank to loan me $x to finance purchase of a car. You say I have financed a debt. I say I have financed the purchase of the car by incurring debt. By financing the purchase I mean I have borrowed $x to pay for the car. I am now in debt to the bank.

Now, where did the bank get the money to loan me the $x? Similarly, how did the Government get the money to pay for my social security? Did Government create it or did it also borrow it from banks? I say it borrowed it from Banks. Why? Where did the money come from?

Am I stuck on the definition of the word 'financing'?

[Fatwa Banker]

I just do not understand. I ask a bank to loan me $x to finance purchase of a car. You say I have financed a debt. I say I have financed the purchase of the car by incurring debt. By financing the purchase I mean I have borrowed $x to pay for the car. I am now in debt to the bank.

Porus,

If you say you financed the car, your terminology is still correct because in most personal finance situations you are borrowing to acquire a specific asset such as car or home, so either terminology means the same thing. In Public and Government finance it is different because the Governments borrows its shortfall in a lump sum with just its guarantee. They do not say $700 of this $1000 T-Bill or US Savings Bond will go to finance Medicare shortfall, a bridge or what have you. That is why different terminology is used such as "financing debt".

Now, where did the bank get the money to loan me the $x? Similarly, how did the Government get the money to pay for my social security? Did Government create it or did it also borrow it from banks? I say it borrowed it from Banks. Why? Where did the money come from?

All of Governments revenues come from taxation, and if it incurs a deficit then the rest is borrowed using the process I outlined earlier. The banks get their money from numerous sources and activities. The primary source is usually your deposits and due to the fractional reserve system this has the effect of expanding the money supply. Other sources include profits from investments and interest, and of course the dreaded Fed depending on the discount rate.

[porus]

FB,

Thank you for clarifying the the term 'financing'. We can set that aside as I think it does not have a bearing on the discussion.

At the risk of being called perverse, I am not considering the mechanics of how Government finances its projects by issuing bonds etc. These market mechanisms are descriptions within the current finance and banking paradigm.

I would like to cut to the chase and consider a simple issue. How do banks end up having so much money that they can provide loans to all and sundry including the government? You have already admitted that banks create money by fiat and expand it through fractional reserve system. However, I do not agree that their primary source is deposits or profits from investments, their primary source is Government borrowing or Government debt. Thus money is simply debt. Once debt is around it gets traded on the market like a commodity.

You already said that if Government created money similar to banks above, it would lead to hyperinflation. I countered with an actual example of Government fiat money during Lincoln's administration. The advantage is that Government debt would not be traded and currency will be stable. It will be owed to people. Naturally, as the expands, Government may vary the supply as it fits. And best of all, Government will not be charged interest.

To get back, why do banks have so much power? I am not talking about small banks which go under in harsh economic climate either.

I think that Banks are the primary cause of inflation because they have the power to vary money supply and interest rates and not always to the benefit of the country but to benefit a tiny cabal. And Banks control the Treasury too.

[Fatwa Banker]

Thank you for clarifying the the term 'financing'. We can set that aside as I think it does not have a bearing on the discussion. At the risk of being called perverse, I am not considering the mechanics of how Government finances its projects by issuing bonds etc. These market mechanisms are descriptions within the current finance and banking paradigm.

To the contrary, without a basic understanding how capital markets work and the current finance and banking paradigm you would not be qualified to have opionions on how to make them better.

I would like to cut to the chase and consider a simple issue. How do banks end up having so much money that they can provide loans to all and sundry including the government? .

It is a directly correlated to its deposits and the performance of its investments. When you want to put your money or conduct business with a bank do you seek out banks that cannot provide loans because they are under capitalized or have poor performing investments? Surely not.

I do not agree that their primary source is deposits or profits from investments their primary source is Government borrowing

You don’t have to agree, just provide a business case where it would behoove the bank to put the money you deposit under their mattress and then borrow money to loan.

or Government debt.

How can a bank loan you money with Government debt ? Please elaborate

Thus money is simply debt.

You lost me on that one !

You already said that if Government created money similar to banks above, it would lead to hyperinflation.

Correct, because bank’s ability to create money is limited by the Government, the Fed, and the market. A Government charged with printing money at will, will devalue the currency.

The advantage is that Government debt would not be traded and currency will be stable.

Since Government debt is traded it is a highly liquid asset, making borrowing possible for the Government . North Korea has a stable currency, that in itself is meaningless goal.

It will be owed to people. Naturally, as the expands, Government may vary the supply as it fits. And best of all, Government will not be charged interest.

I do not trust the Government to do any of that well but how will that make things better ? Remember Government is paying you interest with your money so it is a zero sum game.

I think that Banks are the primary cause of inflation because they have the power to vary money supply and interest rates and not always to the benefit of the country but to benefit a tiny cabal. And Banks control the Treasury too.

The Government has control over all of the above, and you forget that banks are owned by its shareholders. As far as benefitting a tiny cabal, I can't argue with you on that.